German Machinery Output Expected To Fall

FRANKFURT (AP) -- Germany's makers of heavy machinery and factory equipment said Tuesday they expected job losses and a decrease in demand for their products this year as a result of the world economic crisis -- and said orders had already fallen sharply in December.

The Frankfurt-based VDMA association said it expects a 7 percent decline in production due to slackening demand. That would be the sharpest decrease since 1993 when output fell 12 percent.

The group said the sector could lose 25,000 jobs as a result. In 2008, the German machinery industry added 40,000 jobs, the VDMA said.

The group said that while it predicted an increase in production of mining equipment and power systems in 2009, it expected less demand for makers of textile equipment and tool-making machines.

The group said December machinery orders fell 40 percent, while fourth-quarter orders were down 29 percent compared to the year-ago periods. For the quarter, orders in Germany declined 28 percent, while orders from other countries fell 30 percent.

The VDMA said last year's fourth quarter was the worst three-month period recorded since 1958.

For the full year 2008, the group said machinery builders saw a 5.4 percent increase in production, with output valued at euro194 billion ($250.3 billion). Machinery orders, which are often placed years in advance of delivery, declined 7 percent.

Manfred Wittenstein, VDMA's president called on the German government to do more for the industry, claiming the country lacked investment and attention to its production potential.

He said it was decisive today "to strengthen the basis for more production in Germany," and that the country needed to renew its structures and production ability with more focus.

Wittenstein said changes to the way companies could write down depreciation and report and offset losses could help.

Germany remains the world's largest exporter, with its machinery and cars still leading the way, but declining sales, especially at car companies, have been acute.

The German Federal Statistical Office reported a sharp drop in exports in December, despite a preliminary 2.8 percent increase in exports for all of 2008.

The statistical office said Monday the country's exports fell in December by nearly 8 percent compared with December 2007 and 3.7 percent compared with November.